Market News 19th April 2024

The weather has been in the news this week, with massive storms in the Gulf and Dubai’s massive flooding receiving extensive social media coverage.

It has been reported that the UK experienced the wettest 18 months since records began in the 1800s. This has resulted in a decline in UK agricultural production, including the most significant drop in rape seed oil production since the 1980s. As a result, we are likely to see further price increases in all oils in the coming months.

The only good news is that more rain is forecast in Panama, meaning the Canal can return to full capacity, which is good for East Coast US shipping.

According to the United States Department of Agriculture-Foreign Agricultural Service in Manila (USDA-FAS Manila), Philippine coconut oil exports are projected to drop by about 21% to 900,000 metric tons in 2024-2025 due to El Niño affecting production in 46 provinces.

This shortage of coconuts will impact the supply of oil mills in these affected areas.

Additionally, compliance issues with EU regulations on mineral oil (Mosh Moah) used in coconut oil production facilities could further challenge the industry.

The Red Sea crisis looks likely to continue in the long term, and with the situation in the Middle East escalating, shipping is likely to be affected for the rest of 2024.

All this means costs are rising from oils to desiccated, and we are seeing high demand across the market with lots of last-minute scrambling for products.

We do not envisage this changing for Q3 and Q3 this year, meaning it is more important than ever to book your positions early and plan for delays in production and shipping.